Selling part of garden on mortgaged property

snaps22

Hi
Can anyone tell me the right/easiest way to go about the following:

My daughter has a bungalow that is being renovated with a fair sized garden. There is a mortgage on the property. She has made a planning application to build at the bottom of the garden. If the application is successful, it will involve sectioning off the garden and so the title would have to be split. No doubt when the bungalow renovation is finished, it will be worth considerably more than when it was valued for mortgage purposes so loosing some of the garden will not be detrimental to the value even though it will have a smaller garden.

What is the correct procedure for doing this? Does she have to ask permission of the building society first?

Does she get an agents valuation on the bungalow and sectioned off land first?

And then what's solicitors involvement? And what kind of costs would be involved?

What other pitfalls or things to take into consideration might there be?

Anybody been through this themselves?

All help and advice gratefully received.

CloudCuckooLand

Speaking to Lender is probably first. No point incurring solicitors costs etc, if they decline to entertain it for some reason.

DVardysShadow

CloudCuckooLand wrote: »

Speaking to Lender is probably first. No point incurring solicitors costs etc, if they decline to entertain it for some reason.

Unless it is clear that there is enough money in this to pay off the lender before work starts on the new plot. In which case, you can ignore them.

RAS

We sold the bottom third of the garden; leaving quite a decent sized plot with the house. When we sold the house shortly after, we acheived more than I expected for the house, even with the reduced garden. Done properly, I doubt if there will be any loss of value.

What we did do at the EAs suggestion was to put a 2 metre fence up before the house went on the market so that potential buyers were clear what they were getting.

The Mortgage company may ask for before and after estimates of value and expect any "loss" to be funded by the garden sale. Not that I expect there to be a loss.

CloudCuckooLand

What if their credit history is shot? Or they've lost their jobs and this is the startup of their property development business? Or how many times do we see threads from people who mis-calculated their reno budget and want a little remortgage to finish off..?

Ignore/Upset the lender is an option...but what if they call in the mortgage ?

Think you'd need to be sure of the whole picture before risking that.

Richard_Webster

In reality they will probably be able to build the second house and then when they sell that off there will be a transfer of part and they can repay the mortgage out of the sale proceeds.

That way no need to sort out separate titles until later and the Land Registry do that when they get the transfer of part. Think about it - if a builder is developing an estate he doesn't create separate titles before he sells the houses - he sells them by transfer of part and the buyer's solicitor registers it and the Land Registry gives that piece of land a new title number and removes it from the builder's title. Same principle here.